The logo of American carmaker General Motors
Nicholas RatzenBoeck/AFP via Getty Images
This article is an excerpt from Barron’s 10 favorite stocks for 2022, published on Dec. 17. To see the full list, click here.
Tesla may not be the only winner as the auto industry transitions to electric vehicles. General Motors is as well positioned as any of its peers and is valued at less than a tenth of Tesla, at $85 billion. GM, at about $58, trades for eight times projected 2022 earnings.
Led by CEO Mary Barra, GM (ticker: GM) has lofty plans to roughly double its annual revenue to about $300 billion by 2030. That includes $90 billion in sales of electric vehicles, up from a projected $10 billion in 2023. GM is expected to soon unveil its all-electric Silverado.
Investors are skeptical that GM can manage a tricky EV transition and achieve anything close to its ambitious goals, but the stock already discounts a lot of doubt.
“GM has built a scalable platform and is a leader in both autonomous vehicles and batteries,” says investor Ross Margolies of Stelliam Capital Management.
General Motors’ controlling stake in Cruise, a top player in autonomous driving that plans to roll out robo-taxis in the coming years, is worth about $17 billion based on the latest minority investment. GM talks about generating $50 billion of revenue from Cruise by 2030.
A GM bull, Morgan Stanley’s Adam Jonas has a $75 price target on the stock, and conservatively ascribes no value to its legacy car business.
GM enthusiast Ryan Brinkman at J.P. Morgan looks at it differently, saying that investors effectively are getting Cruise and other newer businesses for free, based on the high profitability of its sales of pickups and sport-utility vehicles powered by internal combustion engines.
Barron’s Stock Picks for 2022
We have identified these 10 as among the best candidates to outperform the market next year.
| Company / Ticker | Recent Price | YTD Change | 2021E EPS | 2022E EPS | 2022E P/E | Dividend Yield | Market Value (bil) |
|---|---|---|---|---|---|---|---|
| Amazon.com / AMZN | $3,377.42 | 4% | $41.11 | $51.37 | 65.7 | None | $1,713 |
| AT&T / T | 23.71 | -18 | 3.38 | 3.17 | 7.5 | 8.8% | 169 |
| Berkshire Hathaway / BRK.A | 454,550.00 | 31 | 17,466.30 | 18,928.50 | 24.0 | None | 673 |
| General Motors / GM | 58.39 | 40 | 6.73 | 6.93 | 8.4 | None | 85 |
| Hertz Global Holdings / HTZ | 21.01 | -22* | 4.02 | 2.55 | 8.2 | None | 10 |
| IBM / IBM | 125.93 | 5 | 10.05 | 11.04 | 11.4 | 5.2 | 113 |
| Johnson & Johnson / JNJ | 173.01 | 10 | 9.83 | 10.38 | 16.7 | 2.5 | 455 |
| Nordstrom / JWN** | 20.05 | -36 | 1.27 | 1.99 | 10.1 | None | 3 |
| Royal Dutch Shell / RDS.B | 42.82 | 27 | 4.86 | 6.19 | 6.9 | 3.9 | 166 |
| Visa / V*** | 214.37 | -2 | 5.91A | 7.04 | 30.5 | 0.7 | 467 |
*Since July 1. **Estimates for Jan. 2022 and Jan. 2023 fiscal year ends. ***Sept. fiscal year end. E=estimate. A=actual.
Source: FactSet
Write to Andrew Bary at [email protected]
